Israel Umoh
Despite the N6.4 trillion windfall from Federal Government, the nine oil-producing states in the country borrowed N1.3 trillion in seven years, according to sub-national debt reports of the Debt Management Office.
This means that the total debts of nine oil-producing states rose from N2.04 trillion in December 2015 to N3.35 trillion as of June 2022, despite receipt of N6.4 trillion from Federation Account Allocation Committee and 13 per cent derivation fund.
The nine states are Rivers, Akwa Ibom, Delta, Edo, Abia, Ondo, Imo, Bayelsa and Lagos.
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The Federal Government disbursed a total of N1.98tn as a share of the 13 per cent derivation fund to oil-producing states, the Minister of Finance, Budget, and National budget, Zainab Ahmed, stated on Thursday, at the sixth edition of the PMB Administration Scorecard.
She stated that the amount was paid in seven years despite some of the funds preceding the current administration.
The Minister said, “One of the key functions of the Ministry of Finance Budget and National Planning is in support of states. The President understands very clearly that this economy wouldn’t have been growing consecutively or wouldn’t have been able to pull ourselves out of recession twice.
“We wouldn’t have been able to grow consistently without enabling the states to grow because it is a federation.
“Mr. President has been very uniquely generous in his support to states. I can say no president has provided the level of support provided to the states of the Federation.
“He understands that the federating units need to work together as one to achieve the targets that he has set for the country. So, everybody goes to support sub-national governments.
“In seven years, we have disbursed N1.98 trillion in funds to oil-producing states.”
The 13 per cent derivation fund has been a controversial issue after comments by Rivers State Governor, Nyesom Wike, alleging that the oil-producing states had refused to disclose their own shares paid by the Federal Government from 1999 to the people.
Ahmed further said that the government had supported states of the federation N5.03tn and an additional $3.4bn since 2015.
She said, “With respect to sub-national governments, the ministry goes over and above its statutory role to provide financial support to States:
“A total of N5.03tn plus an additional $3.4bn has been released to states by the Federal Government over the life of this administration.
“Each of these payments has distinct repayment terms with some given as grants and others as loans with favourable repayment terms, including a long amortisation period.
“The support covers the 13 per cent Derivation refund to oil-producing states, refunds for construction of federal roads, ecological support, support from the Development of Natural Resources Fund, Paris Club refunds, support from the Stabilisation Fund, COVID intervention amongst others.”
Reeling out the details, Ahmed said N445bn was given as salary bailout to states except Akwa Ibom, Anambra, Jigawa, Lagos and Yobe in September 2015, while N340bn was disbursed to states except Lagos and Osun as excess crude loan. Also, N610bn was allocated to all states, except Lagos, as a budget support facility.
Other support included: $2.67tn as an outright Paris Club refund; N750m disbursed in 2021 as an SFTAS reward; and N600bn paid as withdrawal from payment of subsidy in April 2022.
Speaking further, the minister revealed that the non-oil sector had continued to maintain high-level performance in terms of revenue generated, adding that it was currently the mainstay of the nation’s economy.
She said that the sector contributed N1.71trn out of the total revenue of N4.19trn, an outturn of 100.7 per cent compared to the budget projection.
“Today, I call your attention to the very high performance of the non-oil sector of our economy. As of September 2022, the Federal Government’s share of oil revenues to fund the budget was N535.5bn representing 32.6 per cent performance), while non-oil tax revenues totalled N1.71tn an outturn of 100.7 per cent compared to the budget projection.
“The non-oil revenue share of funding the Federal Government has improved. We have been able to move from contributing 35 per cent to the federal budget to contributing 73 per cent to the financing of the federal budget.”
N6.4tn windfall
Oil-producing states got N4.46tn from Federation Account Allocation Committee between 2016 and 2020, according to data from the National Bureau of Statistics collated by The PUNCH. When combined with the N1.98tn allocated to oil-producing states as a share of the 13 per cent derivation, the amount moves to N6.4tn.
Within the period under review, Delta got the highest allocation of N804.27 billion while Cross River got the least, N147.86 billion.
The allocation of other states were as follows: Akwa Ibom, N769.19 billion; Lagos, N523.63b; Rivers, N675.54b; Edo, N255.32b; Abia, N225.47b; Ondo, N250.86b; Imo, N234.37b; and Bayelsa, N575.39b.
According to the NBS, FAAC gets oil revenues and related taxes, revenues from the Nigerian Customs Service, company income tax, any sale of national assets as well as surplus and dividends from state-owned enterprises.
N1.3tn debt
Meanwhile, the total debts of 10 oil-producing states rose from N2.04tn in December 2015 to N3.35tn as of June 2022, the Debt Management Office said.
A breakdown showed that in 2015, a total of N1.22 trillion was from domestic creditors while $1.84 billion (or N817.27 billion at the Central Bank of Nigeria’s exchange rate of N444.17 per dollar as of November 1, 2022) was from external sources.
By June 2022, N2.42 trillion was borrowed from domestic sources while $2.31 billion was from foreign sources such as the World Bank and African Development Bank.
For sub-national domestic debts, Lagos leads with the most debt, from N218.54bn domestic debt in 2015 to N797.31bn by June 2022.
It is followed by Delta, whose debt rose from N320.61bn domestic debt in 2015 to N378.88bn by June 2022.
Third on the list is Rivers, from N134.97bn domestic debt in 2015 to N225.51bn by June 2022.
For foreign debt, Lagos leads with the most debt, from $1.21bn in 2015 to $1.27bn by June 2022.
It is followed by Edo, whose external debt increased from $168.19m to $268.31m. Cross River is next, from $136.4m to $215.74m within the period under review.
